Pharmaceutical player Biocon Ltd. shares rallied in the morning session on Thursday, after international brokerage HSBC reiterated its bullishness on the drug maker following the launch of its Qualified Institutional Placement (QIP) issue.
HSBC maintained its 'buy' rating, with a reduced price target of Rs 390 per share, down from Rs 400 earlier. This implies a 14 percent upside from current levels.
On April 23, Biocon's board approved raising up to Rs 4,500 crore through the issue of securities via methods including qualified institutional placements, rights issues, or other permissible routes, in one or more tranches. The QIP aims to bolster Biocon’s financial flexibility and fuel its growth plans across biosimilars, generics, and research services.
The company has set the floor price for the issue at Rs 340.20 per equity share, in line SEBI’s regulations. The relevant date for determining this floor price has also been fixed as June 16, 2025.
HSBC noted that the QIP launched to repay debt, including optionally convertible debentures (OCDs) issued to Goldman Sachs AIF, will ease leverage. However, scaling and creating new biosimilars remains critical for Biocon's turnaround.
At 10.50 a.m., shares of Biocon were trading near the day's high, at Rs 349.45, higher by 2.2 percent on the NSE.
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The brokerage noted that the FDA nod and eventual rollout of insulin aspart in the US could act as major triggers for the stock. HSBC continues to be positive on Biocon’s biosimilars business and pipeline of new products.
However, the brokerage has updated its financial estimates to reflect increased operating costs and depreciation linked to recently commissioned facilities, such as the peptide API unit and the Vizag fermentation site. These revisions may lead to an 11 to 13 percent cut in projected earnings per share for FY26 to FY28, it added.
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